Norway topped 130 countries as a place for companies seeking to avoid disruption to their global supply chain operations, according to the 2015 FM Global Resilience Index Annual Report.
Venezuela ranked last, and the three regions of the US–East, Central and West–all ranked in the top 25.
The rating follows the hottest year on record, the report noted, and that was just the weather. Russian military aggression in Ukraine provoked sanctions that ended up having less impact on its commodity-driven economy than falling oil prices. West Africa was beset not only by a lethal outbreak of Ebola virus, but also by terrorism, which has spread into the capitals of the West. War continues in Syria.
Ukraine, No. 107 in the index, and Kazakhstan, No. 102, each fell 31 places, more than any other country in the index this year. While the move may have been unsurprising for Europe’s largest country, Kazakhstan’s drop reflected less commitment to natural hazard risk management, the report said.
The global Index gauges resilience based on factors including GDP per capita, political risk, vulnerability to oil shortages and price shocks, exposure to natural hazards, quality of natural hazard risk management, fire risk, control of corruption and the quality of infrastructure and local suppliers. Analytics firm Oxford Metrica drew underlying data from sources such as the International Monetary Fund, World Bank, World Economic Forum and mutual insurance company FM Global’s own database of more than 100,000 client locations.
Taiwan jumped more than any country in the index–52 places to No. 37—due mostly to improvement in managing natural hazard risk and fire risk, the report said.
Despite massive oil reserves, Venezuela ranked 130 or the bottom, reflecting “the many challenges South America faces,” the report said. These range from the economic and political to the geological, with the continent’s west coast on the Pacific ‘Ring of Fire,’ a region susceptible to earthquakes and volcanic eruptions.
Norway and Switzerland held the top two places in the index again this year, the report said.
Norway’s high score for risk quality depends on minimal natural hazard exposure. Switzerland scored highly on economic and supply chain factors (where the country leads). The country scores best in the world for an extensive and efficient infrastructure.
“There is growing awareness among business executives of the importance of effective supply chain risk management,” the report said. “Common threats to the supply chain often have a territorial aspect and involve the concentration of resources and activities in vulnerable locations, combined with insufficient redundancy and spare capacity.”
In 10th place is the central region of the US that is subject to a variety of natural hazards, but with less exposure than states in the east or west of the country. The United States and China are each segmented into three regions because their geographic spread produces significantly disparate exposures to natural hazards. Region 1 of the US, encompassing much of the East Coast, ranks 16th and Region 2, primarily the West Coast, ranks 21st.
China’s three regions ranked in the 60s. Beyond natural disaster risk, its other challenges range from “poor accountability and transparency, high levels of perceived corruption and growing security concerns to problems in its financial sector, especially with regard to the fragile position of its banks,” the report said.
New to the top 10 this year, are Qatar, ranked 7, and Finland, ranked 9. Qatar benefits from its macroeconomic stability, efficient goods and labor markets and high degree of security. It owes its rise of 8 places to a considerable improvement in commitment to fire risk management in the region, the report said.
France, ranked 19, trails Germany at 6, the leading EU nation. France has slid down the index in recent years, reflecting a rising risk of terrorism and deteriorating perceptions of both infrastructure and local suppliers. Also exposed to terrorism risk is the United Kingdom, which nevertheless held steady at 20 for the third year running, aided by its relative resistance to oil shocks.
